DIRECTOR LIMITATIONS

Board's Role. The role of a board of directors of a condominium or homeowners association is to oversee operations and set policy. Just as boards have limited authority, so do individual directors.

Vendors. Directors do not have the right to individually contact vendors or give vendors instructions or sign contracts without board authorization. Allowing multiple directors to interact with vendors will result in higher costs to the association, conflicting instructions to vendors and potential loss of vendors. It also creates the potential for ultra vires acts by directors. The proper procedure is to direct matters through the president to the association's vendors or through its managing agent to vendors. Directors who violate these procedures and disrupt operations may be censured by the board and may be subject to personal liability for their acts.

Personnel. Directors are similarly restricted in their ability to interact with employees. Individual directors do not have the right to direct or discipline employees. That function is reserved to the board as a whole or delegated to the president, manager or a managing agent. To allow individual directors to take such actions is to invite potential liability via Labor Code violations, harassment issues, and constructive termination actions.

Records. Directors have a right to review books and records of the Association but that right is limited. Individual directors' access to owner's records should be limited out of respect for an owner's privacy. Even though Corporations Code §8334 gives directors the absolute right to inspect all records, that right was modified by the courts. In Chantiles v. Lake Forest II. Tom Chantiles ran for the board and won but thought his friend should have won as well. He wanted to inspect the ballots and proxies to see how people voted. The board refused and he sued. The court agreed with the board and limited a director's inspection rights. The court imposed a balancing test regarding the right of privacy vs. the right of a director to inspect records.

Board Review. Even though individual directors cannot rummage through members' files or personnel records, the entire board could review an owner's or employee's file related to a pending disciplinary action, maintenance issue, etc.

Volunteer Limitations. To maintain their protections as volunteers, directors cannot receive pay for serving on the board. So as to limit exposure to the association, directors must be cautious about the activities they undertake for the association.